Microsoft’s acquisition of games maker Activision Blizzard could dampen competition in the console and cloud gaming markets, say Preliminary report (PDF)published by the UK Competition and Markets Authority (CMA).
According to the regulator, once the deal closes, Microsoft could find it commercially viable to make Call of Duty games exclusive to Xbox. The consequence of this can be “rising prices, shrinking assortment, declining quality, worse service and slowing innovation”. However, the matter will not be limited to the console segment only: the same Call of Duty and some PC games, including World of Warcraft, may remain available only on Microsoft’s cloud gaming platform.
“Given that our due diligence has determined that Microsoft already has a strong presence in this market through its ownership of Xbox, a global cloud computing service and a leading PC operating system, we fear one.” Small increases in these capabilities will significantly reduce competition in this emerging market to the detriment of current and future cloud gaming platform users.”the department said.
The CMA said it is willing to consider various remedies to complete the acquisition agreement. This may include, but is not limited to, the abandonment of the Call of Duty brand or the spin-off of a portion of Activision Blizzard’s business into a separate entity; or license agreement with competitors. Microsoft has already made an offer to Sony, Steam and Nintendo regarding Call of Duty, and the UK regulator has promised to look into it.
The agency conducted its own market research and found in particular that 24% of players who play Call of Duty on Sony PlayStation consoles are willing to give up the Japanese manufacturer’s consoles if the series becomes exclusive to Xbox. The main argument in favor of the deal will be the appearance of Activision Blizzard games in the Game Pass catalog, but the CMA believes that the disadvantages will outweigh the advantages in this case. US and European regulators had previously rejected the takeover.